Report shows Asia's financial centers losing luster

HONG KONG -- A survey found that Hong Kong and Singapore’s position as Asian financial hubs could be eroding because of rising costs of living and high property costs.

These concerns were considered the top two issues or causes for possible relocation for over 40% of corporations with a regional headquarters in Hong Kong that were surveyed by the Economist Corporate Network’s Asia Business Outlook Survey.

More than half of respondents with a headquarters in Singapore said the rising cost of living was a major issue or cause for relocation, while concerns over property prices fared slightly better, with 38% of corporations calling it a major issue.

Shortage of staff and lack of international school spaces were also high on the list.

“Anecdotally, some firms are moving parts of their operations that don’t need to be in their regional hubs into less expensive cities in other countries,” the report said. The Economist Group does not reveal the companies surveyed.

Yet among the 11 parameters that the survey asked about, pollution ranked dead last among Hong Kong respondents as a reason to move operations elsewhere.

While corporations might prioritize costs, expatriate employees seem to feel differently about the problems that could deter them from living in Hong Kong.

“I think the air pollution would be more discouraging,” said Arthur Chen, an American who works at a hedge fund in Hong Kong. A new father, Chen has been considering moving to more remote areas of the city, where the pollution is considered less severe.

A survey published in 2011 by the American Chamber of Commerce found that half of its responding members knew of people moving away from Hong Kong because of air pollution problems.

Fabio Stefani, an Italian working for an American company in Hong Kong, said high property prices do not greatly affect his desire to live in the city, because his company pays for the rent.

“Other factors like pollution, space, quality of life, especially in context of kids, are what would cause me to move away,” he said.

But even though talk of these worsening disadvantages had begun years ago, the number of foreign firms and expats has not lessened.

In 2011, expats moving to Hong Kong for jobs hit a record high, with the largest number of visa applicants from Britain and the U.S., according to Immigration Department statistics.

Indeed, despite the air pollution and high rents, Hong Kong offers expats other benefits.

“I have found that even though rent does take up a big percentage of my salary a month, Hong Kong has other advantages that doesn't make it so difficult to at least survive,” said A.J. Libunao, who is from Los Angeles and now works in Hong Kong at a university.

Two of the advantages, he said, were convenient and inexpensive public transportation and low taxes.

“The cost of living does make it a bit difficult to live in Hong Kong, especially considering one can get a much more spacious place with the same amount of money back home in the States,” he said.